PremiumThe average number of daily domestic air passengers has flattened in the week ended 11 December, as compared with the previous week. This isn’t a good news for airlines and hospitality businesses. Mint decodes the development:
The average number of daily domestic air passengers has flattened in the week ended 11 December, as compared with the previous week. This isn’t a good news for airlines and hospitality businesses. Mint decodes the development:
What do the numbers show?
The average number of daily domestic flyers stood at 358,000 in the week ending 11 December, compared with 357,000 in the previous week, according to brokerage firm ICICI Securities. That’s a drop from 374,000 in the week ending 27 November. The slowdown comes weeks ahead of Christmas and New Year holidays, a period that typically sees a higher number of bookings. Fears around the Omicron variant of the coronavirus are palpable among flyers who may be postponing travel plans. Airline executives, however, remain hopeful the traffic will pick up in the coming weeks.
What does it mean for the travel business?
Domestic air passenger traffic has seen significant growth since June, with the easing of lockdown restrictions following a steady decline in covid-19 cases after the second wave of the pandemic. The emergence of the Omicron variant now threatens to scuttle the small gains made by the airlines after June. The opening of international flights, which had accelerated, has also slowed down. Now, if the Omicron variant spreads fast, both within and outside India, aviation and hospitality industries can expect more travel restrictions and weakening air passenger traffic demand, especially on the international front.
How have countries reacted so far?
Most countries, including India, have put in place restrictions on international travellers. India has labelled several countries as ‘at risk’. They include the UK and all European countries, besides South Africa, Brazil, Botswana, China, and Zimbabwe among others. Booking searches, especially for international flights, are down week-on-week.
Has Omicron impacted international flights?
India on 1 December rolled back plans to resume scheduled international flights from 15 December, five days after making the resumption announcement. However, special international flights between India and other 33 countries under bilateral air bubble agreements continue to operate. Globally, too, countries have put in place several travel curbs that have delayed the resumption of scheduled flight operations. International airlines have blamed the government-imposed curbs for depressed passenger demand.
What is the outlook for Indian airlines?
Indian airlines have reported huge losses over the last few quarters. Together, airlines and airports incurred losses of ₹24,680 crore during 2020-21 because of covid-19 disruptions, said the ministry of civil aviation. Credit rating agency Icra estimates that Indian airlines would require additional funding of ₹37,000 crore between 2020-21 and 2022-23 to make up for its losses and debt. The threat of Omicron is therefore bad news since it would pressurize operating performance and further push out measures to reduce debt.
